Proposal to amend baseline chrome iron ratio in UG2/MG chrome ore index

This consultation, which will be open until Thursday November 2, seeks to ensure that our methodologies continue to reflect the physical market under indexation, in compliance with the International Organization of Securities Commissions (IOSCO) principles for Price Reporting Agencies (PRAs). This includes all elements of our pricing process, our price specifications and publication frequency.

Specifically, Fastmarkets proposes to amend the base chrome to iron ratio in its chrome ore South Africa UG2/MG concentrates index, cif China to 1.3:1, from 1.27:1 as currently stipulated in the methodology.

This follows initial feedback from market participants and our own analysis of the data we receive on a weekly basis, which shows that 1.3:1 has been the most liquid of the ratios reported since the beginning of the fourth quarter of 2022. The proposed change would be aimed at reflecting the spot market as closely as possible.

In the calculation of the index, if price data is received for material with chrome to iron ratios different from that of the index basis, this is normalized using in-house developed models based on regression analysis.

The proposed change of the base chrome to iron ratio would also be aimed at increasing the predictability of the index calculation by helping to reduce the degree of normalization required to adjust prices for the most liquid products to the index base specification.

Following feedback from the market suggesting material with a ratio of 1.37:1 chrome to iron ore could be considered “MG,” Fastmarkets also proposes to expand the range of ratios accepted to include 1.37:1 on the upper end, from 1.35:1 currently.

The proposed changes to the specification are highlighted below in italics:

MB-CHO-0003 Chrome ore South Africa UG2/MG concentrates index, cif China, $/tonne
Quality: Up to 2mm (99% min); Cr range 40-42%; Silica max 6%; Alumina max 18%; MgO max 16%; P max 0.01%; S max 0.01%; chrome iron ratio 1.27:1-1.37:1, basis 1.3:1
Quantity: Min 5,000 tonnes
Location: cif Tianjin, China (normalized for any Chinese mainland sea port)
Unit: USD per tonne
Payment terms: Payment at sight
Publication: Weekly. Tuesday 2-3pm London time
Notes: Bulk (container deals normalized)

This price is a part of the Fastmarkets Ores & Alloys Physical Prices package.

This six-week open consultation begins on Thursday September 21 and will close on Thursday November 2. The amendment, subject to market feedback, will be implemented as of Tuesday November 14.

To provide feedback on this index or if you would like to provide price information by becoming a data submitter to this index, please contact Claire Patel Campbell by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Claire Patel-Campbell, re: UG2/MG chrome ore index.” Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request

To see all Fastmarkets’ pricing methodology and specification documents go to https://www.fastmarkets.com/methodology.